As the Euro Tumbles, Spaniards Look to Gold

The unremitting deterioration of the eurozone’s sovereign debt landscape continues to fuel uncertainties about the longevity of the euro as a strong currency. Such uncertainties are not only leading to capital flight from the EMU’s periphery to the core and destabilizing markets worldwide, but they are also beginning to frighten southern European savers into seeking refuge outside their 10-year-old currency.

Such is the case in my home country of Spain – the latest tumbling economy to threaten the euro’s survival. As the crisis deepens, there is still a window of opportunity for Spaniards to turn to gold as a means to protect their wealth against the risks of increased foreign exchange volatility, forced re-denomination, or even a total currency collapse.

Spain: Too Big To Ignore

While the general consensus among analysts is that the common currency may withstand (and even desire) Greece’s exit, Spain is both “too big to fail” and “too big to rescue.”

Indeed, as the crisis finally hits Spain, the eurozone’s fourth-largest economy, the country has witnessed the flight of €315bn ($397bn) worth of foreign capital in the past year – the equivalent of 22% of its GDP. Of this amount, €220bn ($274bn) vanished during the first six months of 2012. And in just-released numbers from the European Central Bank (ECB), private sector deposits at Spanish banks fell almost 5% in July (the biggest drop since the ECB began to record this data in 1997).